Indonesia still destination for electricity infrastructure investment

Indonesia still destination for electricity infrastructure investment
Indonesia is still considered to be an infrastructure investment destination that is targeted by many global investors, including in the electricity sector, an official has said.

According to the deputy for investment climate development at the Ministry of Investment and Investment Coordinating Agency (BKPM), Yuliot Tanjung, the realization of investment for infrastructure needs in 2021 has remained stretched compared to the previous year.

The government is optimistic that this situation can continue in 2022, he said.

“Because the investment target is increasing, the Ministry of Investment/the BKPM will also be optimistic,” he observed in a written statement released in Jakarta on Friday.

As per the Ministry of Investment/BKPM, in the first quarter of 2021, the realization of foreign-domestic investment reached Rp659.4 trillion, which was higher than the realization of investment of Rp611.6 trillion during the same period last year.

According to Yuliot, the realization of investment in the power sector has been prominent throughout the current year.

The power sector is one of the big five sectors in terms of investment realization: housing, industrial, and office areas (which account for Rp 88.8 trillion of the investment); basic metal industry, metal goods, non-machinery, and equipment (Rp 82.7 trillion); transportation, warehouse, and telecommunications (Rp 80 trillion); power, gas, and water (Rp59.4 trillion); and mining (Rp 53.3 trillion), he informed.

“Generally, all investment targets for 2022 will increase, and consequently, investment in multiple sectors will also increase,” he said.

Similarly, Yusuf Rendy Manilet, an economist from CORE Indonesia, said that in 2022, investors are expected to target several strategic infrastructures.

“As for other infrastructure sectors, there is an opportunity that foreign investors might be interested in financing several National Strategic Projects (PSN), such as energy (sector), toll roads, or dams,” Rendy elaborated.

The still-active investment in the electricity sector is evidenced by the awards received for a number of electricity projects, including steam-electric power plants (PLTUs) Jawa 9 and 10 at the 2021 Asian Power Awards.

PLTU Jawa 9 and 10, on Thursday (November 4, 2021), received an award in the Coal Project of the Year category and another award for implementing environmentally friendly low-emissions technology and USC system.

A similar award was also received by PLTU Jawa 9 and 10 some time ago from IJGlobal and ALB Thomson Reuters. The two PLTUs developed by a consortium of PT PLN (Persero) subsidiaries, namely PT Indonesia Power (PT IP) and PT Barito Pacific Tbk, are considered as projects with the best funding in the energy sector.

In terms of funding arrangement, IJGlobal has assessed that the technologically advanced and environmentally friendly power plant project is the right model for power plants in Indonesia.

“This Indonesian company has succeeded in adapting the financing pattern, as done in the Middle East. This is a very good thing, and can be a model for power plants in Indonesia in the future,” project financing advisor Subash Narayanan said, as quoted on the IJGlobal Award announcement page.